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Outlining Intercompany Processes

Objective

After completing this lesson, you will be able to outline Intercompany Processes

Intercompany Processes Overview

Intercompany business processing describes business transactions which take place between two companies belonging to one organization. In SAP S/4HANA Cloud for Professional Services, intercompany occurs when a company A (the ordering company) has an affiliate company B delivering services in the course of a customer or internal project.

The delivering company posts expenses and intercompany employees record time on the project created in the ordering company. The intercompany billing request is generated via a background job in the delivering company, resulting in the creation of a intercompany billing document request. Finally, the delivering company charges the ordering company by creating an intercompany invoice with reference to the billing request. The intercompany invoice is automatically posted to the accounts payable of the ordering company. You can also control intercompany postings for customer and internal projects by allowing/blocking intercompany transactions.

Process Flow for the Intercompany Process

Delivering Company: Employee Cost Center: Employee time confirmation on the project. Credits cost center with cost rate and margin. Time and expense recording is done, and intercompany (ICO) postings create a billing proposal. Periodic ICO Invoice: Based on cross-company allocated costs, periodic ICO invoices are generated and automatically transferred per IDOC (Intermediate Document). Ordering Company: Staffing Employee Project: Receives staffing information from the delivering company. Customer Project: Debits the project with cost rate and intercompany margin. Time and expense recordings are managed here. Accounts Payables Posting: No cost object is assigned. ICO postings are received and recorded in accounts payables. Billing: The project is posted, and a billing proposal is created, leading to the billing of the customer.

Let’s consider that a customer project is created in the ordering company, for example, company code 1010 (Germany). When planning the project, the Project Manager may find that is required to staff a resource belonging, for example, to the delivering company 1710 (United States). For the ordering company 1010, the service sales order is created automatically after the Project Manager maintains project billing, and the billing process is carried out as described in scope item Sales Order Processing (J14).

However, because these companies balance their accounts independently, the delivering company must bill the ordering company for their services as well. Scope item Intercompany Processes for project-based services (16T) is a prerequisite for intercompany billing, covering customer and internal project creation and planning, staffing, time recording, and expense posting. After these business conditions are met, Intercompany Billing for Cross Company Cost Accounting Postings (4AN) focuses on resource related intercompany billing. It incorporates the creation of intercompany sales orders, intercompany debit memo requests, and intercompany invoices.

The next sections will take you through Intercompany Processes (16T) and Intercompany Billing for Cross Company Cost Accounting Postings (4AN) in further detail.

From SAP S/4HANA Cloud, public edition 2308, scope item 4E9 (new project billing) is also a prerequisite for intercompany billing.

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